Coalition claims victory in Palmer plan

Clive Palmer, flanked by former US vice president Al Gore, announced on Wednesday he would help the government keep its key election promise by backing the repeal of the carbon tax.

But in return the Palmer United Party leader wants a legal guarantee that electricity savings will be passed onto consumers and an emissions trading scheme (ETS) be ready to go if needed.

He stopped short of linking the tax scrap to the introduction of an ETS, meaning the government can push ahead with its key election promise and deal separately with legislation to build a framework to price carbon.

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The coalition claimed victory.

"What we have seen today is vindication," Environment Minister Greg Hunt told reporters in Canberra.

"The announcement this evening means that the Senate will be following the coalition's plan."

But things won't go as smoothly when it comes to their "direct action" climate change plan, which passed the House of Representatives on Wednesday but looks set for defeat in the upper house.

Mr Palmer blasted the $2.55 billion alternative scheme as a waste of money and said his three PUP senators - plus the Australian Motoring Enthusiast Party's Ricky Muir - won't back it.

It's hard to imagine how the government could support Mr Palmer's demands for an ETS, which they've repeatedly labelled a carbon tax with another name.

Under Mr Palmer's plan, an ETS would only become effective when Australia's main trading partners such as China, the US and Japan implement similar schemes.

"That ensures that we're not disadvantaging trade and we're looking after jobs," he told AAP.

Mr Palmer will meet Prime Minister Tony Abbott for breakfast on Thursday to discuss the raft of proposals.

"These measures show a commitment that we will do our fair share when our trading partners do," Mr Palmer said.

"It's not too radical, just sensible."

Despite all but killing off the carbon tax, environment groups and the Australian Greens quickly welcomed Mr Palmer's other surprise announcements.

PUP senators will not support the abolition of the Clean Energy Finance Corporation or the Climate Change Authority, or any changes to the renewable energy target before 2016.

The Clean Energy Council said Mr Palmer's support for the RET, the 20 per cent by 2020 target under review by the government, had delivered "a Titanic boost for the clean energy industry".

The Climate Institute's John Connor said more clarity was needed about Mr Palmer's ETS proposal, but at least Australia was no longer on track for a "climate policy wasteland".

Australian Greens leader Christine Milne cautiously welcomed the lifeline thrown to the climate agencies, but said she'd seek more detail from Mr Palmer.

"The whole country tonight will be shaking its head saying 'what does this actually mean?' and it would have been good to get some clarity," she told reporters in Canberra.

Labor leader Bill Shorten said the ball was now in the prime minister's court.

"He's the prime minister and it's his responsibility to tell Australians whether he intends on doing a deal with Clive Palmer," he said.

Independent senator Nick Xenophon, who also holds influential voting rights in the upper house, said he would support scrapping the carbon tax if there was an ETS framework in place.

Mr Palmer said he is yet to consider the future of Australian Renewable Energy Agency, which is on the government's chopping block.

The colourful Queensland MP added that "everyone is allowed to change their mind" when asked of his shift to support action on climate change.

Mr Palmer told ABC TV that Mr Gore had helped "enlighten" him on the subject.

He denied paying his American visitor for Wednesday's cameo appearance, but admitted buying him dinner.